In the world of Israel's wealthiest families, the battle for inheritance is a complex and often devastating affair. It's a story that goes beyond mere money; it's a tale of human emotions, family dynamics, and the challenges of preserving wealth across generations.
The Curse of Wealth: A Global Phenomenon
The issue of inheritance battles is not unique to Israel. As the saying goes, "The father buys, the son builds, the grandson sells, and his son begs." This pattern, observed globally, highlights the challenges of intergenerational wealth transfer. The first generation, through hard work and sacrifice, builds an empire. The second generation, having witnessed this struggle, often preserves and expands the wealth. But the third generation, raised in abundance, can squander the inheritance, leading to the collapse of fortunes and families.
The Importance of Succession Planning
Succession planning is a critical yet often overlooked aspect of wealth management. Studies show that a staggering 70% of wealthy families lose their wealth by the second generation, and a further 90% by the third. The reasons are not solely financial; they stem from a breakdown of trust, communication, and a lack of preparation for financial responsibility among heirs.
Dr. Nava Michael-Tsabari, an expert in family business research, emphasizes the need for careful planning. She argues that the language of "intergenerational transfer" can be insulting to the founding generation, as it suggests a forced retirement. Instead, she advocates for a process of intergenerational cooperation, where the founder and their children work together to ensure a smooth transition.
Case Studies: Success and Failure
The Carasso family, one of Israel's wealthiest, provides an interesting case study. After the death of Moshe Carasso, his eldest son, Haim, controlled the family business for nearly four decades. However, disputes arose when the third generation entered the picture. Maccabi Carasso, known for his campaigns for transparency, led a family dispute that reached the courts. Yet, the family eventually overcame their differences, issuing a statement emphasizing their unity.
In contrast, the unequal succession in the Wertheim and Ofer families led to serious conflicts. The Wertheim siblings, Dudi and Drorit, fought over an uneven division of assets, while the Ofer siblings, Liora and Doron, faced bitter disputes over their father's unequal division of wealth.
The Strauss Family: A Success Story
The Strauss family, now worth over 13 billion shekels, is a testament to the power of planned succession. Hilda and Richard Strauss, German immigrants, established a small dairy farm in Nahariya 90 years ago. Their son, Michael "Miki" Strauss, and daughter, Raya Strauss Ben-Dror, shared management responsibilities. Raya later retired and sold her shares, focusing on philanthropy and the study of family businesses. Her daughter, Michael-Tsabari, emphasizes the importance of setting ego aside and preserving family unity through planned succession.
The Rise of Family Offices
The reality of newly wealthy entrepreneurs in Israel has given rise to an industry of family wealth management firms, known as family offices. These firms advise baby boomers on transferring wealth to future generations, emphasizing the idea of "inheritance during life" rather than "inheritance after death."
Ofek Lugasi, founder of Horizon Group, highlights the importance of preparing businesses for the day after the founder's retirement. He argues that 85% of failed intergenerational transfers are due to family wars, poor communication, and a lack of training for children.
Gilad Slonim, managing partner at Value Family Office, specializes in financial solutions for families. He advises clients to understand their goals and let go of personal baggage when planning their retirement and inheritance. He believes that retirement should be planned while the founder is still alive to preserve both wealth and family unity.
Conclusion: A Call for Action
The stories of these wealthy families serve as a cautionary tale. While the battle for inheritance is a complex and emotional issue, it is not an inevitable outcome. With careful planning, communication, and a focus on preserving family unity, these battles can be avoided. As Dr. Michael-Tsabari says, "Healthy relationships save both the business and the family for future generations." It's time for a new approach to wealth management, one that prioritizes family and the long-term health of businesses.
